The Securities and Exchange Commission (SEC) charged individuals affiliated with Direct Access Partners, LLC (“DAP”), a New York City broker-dealer, with a massive fraudulent scheme involving tens of millions of dollars in illicit bribes paid to a senior finance official of Banco de Desarrollo Economico y Social de Venezuela (“BANDES”), a state-owned Venezuelan bank.

Clarke is an executive vice president in fixed income within DAP’s Global Markets Group (“DAP Global”) who executed fraudulent roundtrip trades with BANDES as both buyer and seller. Between January 2009 and June 2010, DAP Global generated more than $66 million in revenue for DAP from transaction fees resulting from markups and markdowns on the riskless roundtrip trades in Venezuelan sovereign or state-sponsored bonds. Clark also maintained files to track the illicit markups and markdowns resulting from the fraudulent trades.

This $66 million in revenue was the result of a complex kickback scheme devised by the Defendants in which a share of this revenue was illicitly paid to BANDES Vice President of Finance, Maria (Mary) de los Angeles Gonzalez de Hernandez (“Gonzalez”), who authorized the fraudulent trades, and to Defendants Jose Alejandro Hurtado (“Hurtado”), Haydee Leticia Pabon (“Pabon”), and Iuri Rodolfo Bethancourt (“Bethancourt”) for their roles in the scheme.

Hurtado, the intermediary between DAP and Gonzalez, was compensated more than $6 million in kickbacks disguised as salary payments from DAP, a portion of which he remitted to Gonzalez. Pabon, Hurtado’s wife, received approximately $8 million in markups or markdowns on BANDES trades that were funneled to her from DAP in the form of sham finders’ fees. Bethancourt, a Panama resident, received more than $20 million in fraudulent proceeds from DAP via his Panamanian shell company, ETC Investment, S.A. (“ETC”). Bethancourt then paid Gonzalez a portion of this amount.

“These traders triggered a fraud that was staggering in audacity and scope,” said Andrew M. Calamari, Director of the SEC’s New York Regional Office. “They thought they covered their tracks by using offshore accounts and a shadow accounting system to monitor their illicit profits and bribes, but they underestimated the SEC’s tenacity in piecing the scheme together.”

In a related action, the U.S. Attorney’s Office for the Southern District of New York announced criminal charges against Gonzalez as well as Clarke and Hurtado.

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This entry was posted on Thursday, May 9th, 2013 at 8:06 pm and is filed under WT Blog.
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